Care Shield Compliance Press Desk

No one now has to pass council fee uplifts on to you

The Market Sustainability and Improvement Fund is being folded into councils' Fair Funding Allocation, taking the fee-reporting requirement with it.

By the Care Shield Compliance Press Desk··3 min read·England

The mechanism that obliged councils to demonstrate they were increasing provider fee rates is being removed. The Market Sustainability and Improvement Fund and the Social Care Grant are being consolidated into local authorities' Fair Funding Allocation. With the ring-fence goes the reporting requirement, and with the reporting requirement goes any guaranteed pass-through of uplifts to providers from 2026/27.

What has changed

DHSC published its adult social care priorities for local authorities on 18 December 2025, last updated 21 January 2026, setting three priority outcomes for councils in 2026/27. The guidance is on GOV.UK.

Around £4.6 billion of additional funding for adult social care is available in 2028/29 compared with 2025/26. That headline is real money. But existing ring-fenced grants, including the MSIF and the Social Care Grant, are being consolidated into the Fair Funding Allocation, giving councils greater discretionary spending flexibility.

Discretionary flexibility is the operative phrase. It means the money arrives without a label saying what it must be spent on.

Why MSIF mattered to providers

MSIF was never popular, and the reporting it generated was widely regarded as burdensome by councils. But it did one thing that mattered enormously to providers: it required a local authority to show what it was doing about provider fee rates.

That requirement created leverage. When you sat opposite a commissioner arguing for a rate that covered your actual costs, there was a national expectation behind you, and a reporting return the council had to complete. Remove it and the conversation becomes purely local, purely discretionary, and entirely dependent on the financial position of the individual council.

Councils facing acute pressure across children's services, temporary accommodation and SEND transport now have a pot of money with fewer strings attached to it. It is not cynical to predict where some of it goes.

The timing problem

This lands at the same moment Fair Pay Agreement costs are coming into view. Negotiations begin in April 2027 and the first agreement takes effect in April 2028, with £500 million allocated against around 1.5 million workers.

So the sequence is: your wage floor gets set nationally by a body local government sits on without a vote, while the mechanism that pushed councils to fund fee increases disappears. Providers sit in the gap.

What this means for you

  • Do not assume any part of the £4.6 billion reaches your fee rate. Ask your commissioners directly what their 2026/27 and 2027/28 fee assumptions are and get the answer in writing.
  • Rebuild your cost-of-care evidence now. Without a national reporting requirement, the quality of your own cost data becomes the whole of your negotiating position.
  • Negotiate collectively where you can. Individual providers have lost a national backstop; provider associations and local forums are what remains.
  • Model a scenario in which fee uplifts do not track wage increases between 2026/27 and 2028/29. If that scenario is unsurvivable, you need to know now, not in 2028.
  • Look at your contract renewal dates and try to bring negotiations forward into a period where you still have leverage.
  • Watch what your council publishes about its three priority outcomes. That is where you will see what it intends the money to do.

Where this came from

Adult social care priorities for local authorities 2026 to 2027, published by DHSC on GOV.UK.

ShareLinkedInXFacebookWhatsAppEmail

Sources

  1. Adult social care priorities for local authorities 2026 to 2027 — GOV.UK

Questions people ask about this

Does removing the ring-fence mean councils get less money?

No. Around £4.6 billion of additional funding for adult social care is available in 2028/29 compared with 2025/26. What changes is control: consolidating MSIF and the Social Care Grant into the Fair Funding Allocation gives councils greater discretionary spending flexibility, so the money arrives without a requirement to demonstrate provider fee increases.

How should we approach fee negotiations now?

Assume nothing is passed through automatically. Ask commissioners in writing what fee assumptions sit behind their 2026/27 and 2027/28 budgets, rebuild your own cost-of-care evidence, and negotiate collectively through provider associations where you can. Your own data is now the substance of your position rather than a supplement to a national requirement.

What is the risk if fee rates do not track wage costs?

The Fair Pay Agreement's first settlement takes effect in April 2028 with £500 million allocated across around 1.5 million workers. If your local fee uplifts do not move with the wage floor and the differentials above it, margin absorbs the gap. Model that scenario explicitly before contract renewals rather than after.

How this was written. Care Shield’s press desk drafts from primary sources — the statute book, regulator publications and government announcements — and publishes automatically once every factual claim traces to a named source. The sources are listed above so you can check them. It is not legal advice, and it is not a substitute for reading the regulation that applies to your service. If you find something wrong, tell us at hello@careshieldcompliance.co.uk and we will correct it in public, on this page.

Related